Schools and Ethics: More Than Just Teaching

John S. R. Shad's suggestions for what business schools should do about ethics (''Business's Bottom Line: Ethics,'' Op-Ed, July 27) are only partly on target. Yes, basic ethical precepts should get emphasized across the curriculum. No teacher ought to be able to beg off, as many now do, because ethics is not within the syllabus or within their areas of expertise.

More dubious is his hope that at admissions we can distinguish the John Shads from the Ivan Boeskys. Would that we could! Business schools should continue to welcome ambitious, competitive men and women. There are no personality tests or interview methods that reliably spot bad apples. References can help, but try in these days of open personnel files and legal challenges to get candid evaluations.

A better recommendation is to be bolder about refusing degrees to students who behave unethically in school. I can defend not guessing in advance; I cannot defend failing to act on what we experience.

Mr. Shad did not mention the biggest challenge for research - and eventually for teaching: the analogue of W. Edwards Deming's message on quality. Mr. Deming credits Japan's success not to the superiority of its workers but to managers who focus training, incentives, engineering and working conditions on making quality goals easy for workers to achieve. Wall Street manages and regulates the devil out of areas like mutual funds to prevent the recurrence of the abuses of the 1930's and 60's. However, in new areas like risk arbitrage, Wall Street has not balanced encouragement of initiative with anticipation of new temptations to cheat. Research can help us learn to lock the barn with better training, incentives and visible supervisory emphasis before young cowboys get tempted to try rustling as a career.

Business schools will be only partway home if we teach individuals ethics. An equal challenge is to make managers skilled in creating climates that encourage staying within and discouraging straying from ethical limits. WILLIAM R. DILL President, Babson College Wellesley, Mass., July 29, 1987

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A version of this letter appears in print on August 13, 1987, on Page A00030 of the National edition with the headline: Schools and Ethics: More Than Just Teaching. Today's Paper|Subscribe